Portfolio companies optimistic on 2012

PwC's latest survey of private equity-backed portfolio companies in the UK indicates firms are optimistic about growth forecasts and profits in the coming year. The study found that businesses are determined to drive profits and pursue growth opportunities in the coming year, though they say aggressive growth targets will not be achieved through tough cost cutting and asset stripping.

On the contrary, 60% of respondents plan to increase their headcount, as their PE parents were willing to commit additional capital to successful holdings.

Fears about the upcoming "wall of refinancing" were also quelled, with the report suggesting many portfolio companies have already tackled their debt arrangements. Almost half of the companies surveyed by PwC said their debt was already restructured. The firms that have already restructured are also primarily larger businesses, which were thought to be the most threatening cases, taking pressure off of GPs.

However, around €140bn of LBO debt will need to be refinanced in 2014, according to Linklaters, and the wall of refinancing remains a major issue for the industry.

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